Defence sources now say Iran's Revolutionary Guard, which is an elite fighting force appointed by the country's supreme leader, is giving the original bomb-making training to Iraq insurgents, our correspondent said.

The bomb specialists are then said to return to Basra where they spread the knowledge among fellow insurgents targeting British military convoys.

The bombs being used have a specially shaped charge capable of puncturing a hole in the cladding of UK armoured vehicles, Paul Wood said.

The success of these attacks has led British forces to use helicopters to transport troops so as to avoid being targeted, he added.

These fresh claims, which first appeared in the Sun newspaper, follow earlier allegations by a British official over Iranian links to the Shia insurgents in southern Iraq.

The unnamed official also linked the type of bombs used in the attacks on UK forces in Basra to Iran's Revolutionary Guard.

Blair expressed concern during a joint conference with the Iraqi leader

They had provided technology to a Shia Muslim group in southern Iraq, he claimed, prompting a diplomatic storm.

The accusation was the first time a British official had made specific allegations over Iran's role in Iraq.

'Baseless'

Speaking at a joint news conference in London with Iraqi President Jalal Talabani last week, Mr Blair said it was clear "that there have been new explosive devices used - not just against British troops but elsewhere in Iraq.

"The particular nature of those devices lead us either to Iranian elements or to Hezbollah... however, we can't be sure of this," he added.

Despite the qualification, Mr Blair said there could be "no justification" for interfering in Iraq.

The Ministry of Defence said these new claims supported the prime minister's comments.

'No proof'

A spokesman said the evidence pointed towards Iranian involvement, but it did not have decisive proof.

Reiterating the prime minister's statement he said: "What is clear is that there are new types of explosives being used by insurgents in Basra and elsewhere in Iraq.

"The particular nature of them leads us to think of Iranian elements or Hezbollah".

But he said there was no clear proof Iran's Revolutionary Guard was involved.

Foreign Secretary Jack Straw said the UK hoped to discuss the evidence with Iran.

But the Iranian government has dismissed the claims as "baseless" and demanded the UK government produce evidence to back up the claims.

Basra's governor has accused UK forces of destabilising the area

It has also denied any role in the blasts that have killed eight British soldiers in Iraq in the last five months.

Meanwhile British forces in Iraq are trying to draw a line under the storming of a police station in Basra by saying the UK is prepared to pay compensation for injuries and damage suffered in the incident.

In a joint statement, the British Consulate General, representing the Army, and the Provincial Council of Basra expressed "regret" over the incidents which took place in the city on September 19.

"We also regret the casualties on both sides and the material damage to public facilities," the statement said.

"The British Government is prepared to pay valid claims for compensation for casualties and material damage in the well-established manner."

The British commander in the city ordered troops to storm the police station to rescue two undercover SAS soldiers who were said to have been handed over to local militias after being arrested by Iraqi police.

The local governor denounced the British action as "barbaric" and the incident threatened to wreck relations between the UK forces and Iraqi authorities.